WPX Energy to boost Bakken rig count, enhance completion design

By The Bakken Magazine Staff | November 12, 2014

WPX Energy released its five-year plan to simplify its geographic focus and expand returns, margins and cashflow in its three core resource plays in North Dakota, New Mexico and Colorado.

In the three plays, WPX has approximately 16,000 remaining drillable locations on a gross basis, more than 14 trillion cubic feet of proved, probable and possible reserves at the end of last year and approximately 480,000 net acres, the company said.

“We’re confident we have the right building blocks in the Williston, San Juan and Piceance basins. We have upside in all three. Our strategy accelerates our oil development and capitalizes on what we can gain from technical excellence, new technology and greater economies of scale,” said Rick Muncrief, president and CEO.

WPX is already executing its strategy by implementing six million pound completions in the Williston Basin. The company says early results from doubling the stimulation size showed a 14 percent production increase from three Bakken shale wells and a 13 percent increase from three wells in the Three Forks formation. The company anticipates its five-year plan will allow for increased oil production five-fold and a chance to triple its operating margins and company value by 2020 compared to its results last year.

WPX, in its spinoff of Williams E&P two years ago, had assets in eight areas—seven domestic plays along with South American interests, but after divesting its properties in Texas, its narrowing its strategy to focus on half of its properties—the Williston, San Juan and Piceance basins.

The company’s second quarter results show oil comprised 14 percent of WPX’s equivalent production, which is almost double from its 8 percent in 2012. In the same period, the company reported its oil sales have risen from 23 percent to 37 percent.

Muncrief said the question he hears most often is, ‘Are you a gas company or are you going to be an oil company?’ His answer is simple, “For WPX, it’s not either or. We’re both.”

“With the depth we have in our gas reserves, we like the optionality it gives us. We also believe that our gas is going to be advantaged on pricing because of the access we have to premium western markets,” Muncrief said. “At the same time, increasing our oil output brings significant value to our stockholders. Ideally, oil will account for more than 25 percent of our total volumes as we execute our strategy. That’s going to require us to achieve a five-fold increase in our oil production compared to what we did domestically last year.”

Company plans are to improve its drilling economics in the Williston Basin before boosting its rig count there. It aims to optimize completion practices, increase initial production rates and estimated ultimate recoveries in the basin. 

WPX has more than 220,000 net acres and more than 4,600 wells in the Piceance Basin, and has taken its Gallup Sandstone oil exploration project in the San Juan Basin from zero locations to more than 400 in less than 18 months, cutting average well costs by 26 percent during the first half of 2014.

“The value in our strategy comes down to how well we execute. Changing how we think about our assets and how we manage our business are critical to our success,” said Muncrief. “The greatest change at WPX may very well come from within.”

“Our mission is aggressive and measurable. By casting a vision and setting out our strategy, we’re defining what success looks like and providing a means to track our progress. This is part of creating a high accountability culture at WPX and focusing on our long-term value proposition.”